Foodie ban: What does the ban on agricultural imports and transit from Ukraine imposed by several EU countries mean?
Many months activity of European farmers have ended not in our favour. The cost of losing is about 15% of all agricultural exports, or $1 billion
This week, Mykola Solsky, Minister of Agrarian Policy and Food, began a major tour throughout Europe. There, he will try to influence the unprecedentedly radical measures imposed on Ukrainian agricultural products by the EU member states.
The fact that they were adopted during a full-scale war and without regard to Ukraine's position fully characterises the level of escalation of the 'Ukrainian agrarian issue' in the EU. It also shows managerial failures in this area within the country.
Mind looks into the reasons behind the European embargo on food imports from Ukraine and how threatening it is in the historical context.
What happened? In less than four days, three European countries – Poland, Hungary, and Slovakia – have imposed restrictions on the supply of agricultural products from Ukraine, and Poland has also banned their transit through its territory. In the near future, Bulgaria may join this list, as it is considering the feasibility of extending Ukrainian grain exports.
The last intrigue that remains is whether Romania will impose restrictions, and if so, in what form. The key question is whether export restrictions will affect the ability to ship Ukrainian grain through the ports of Constanța.
The official reason is dumping and violation of the original agreements. They provided transit through EU countries rather than active sales in these markets.
Read also: Agricultural logistics: Maritime exports are in crosshairs of russian sabotage, while ground ones stir up Europe
Is European logistics that important? Both yes and no. In absolute terms, the volume of grain exports across the European border is relatively small.
Poland provides about 10% of transhipment, Hungary – 7%, and Bulgaria – less than 5%. However, in terms of the markets of those countries, these are huge volumes. According to Eurostat, the total imports of Ukrainian wheat and corn to the four most affected countries – Poland, Slovakia, Hungary, and Romania – amounted to almost 6 million tonnes in the last marketing season, compared to 1.5 million tonnes before the war.
Was the decision to restrict Ukrainian exports unexpected? No, it wasn't. EU farmers have been protesting against Ukrainian agricultural products for several months. Since the summer of 2022, they had been warning that it would all 'end badly' if they were not listened to.
That the Ukrainian side, seeing the unambiguously expressed dissatisfaction, has not acted proactively is an obvious fact.
Are the claims of European farmers justified? Yes, of course, they are. The problem of overstocking in Poland arose long before 2022, but the active import of Ukrainian products highlighted it.
Ukrainian grain is at least 20% cheaper than Polish grain, and with this difference, we cannot blame Polish processors who prefer it.
It is also psychologically difficult to see a Ukrainian company set up in Poland and employing Ukrainians making money while its Polish competitor is losing money.
Who has the last word? In an ideal world, it would be the European Commission, which has already stated that it considers such agricultural protectionism unacceptable. In particular, the European Commissioner for Agriculture and Trade, Miriam Ferrer, has said that the Commission is waiting for explanations from Poland and Hungary on the reasons for the ban on imports of Ukrainian grain.
However, the EU's procedural mechanisms leave a fairly wide scope for protecting local markets. And there is no doubt that Poland, Hungary, Slovakia, and in the future, Romania will have perfectly documented justifications for their decisions.
The European Commission has already promised to increase the amount of commercial compensation to affected farmers. The initially agreed amount of $60 million was immediately recognized as ridiculous and insufficient.
Read also: Friendship of convenience: The EU compensates local farmers for the 'inconvenience' of agricultural products from Ukraine
Was it only grain that was banned? No, the widest possible range of agricultural products has been restricted, including milk, eggs, poultry, honey, buckwheat, hemp, beetroot, sugar, vegetables, fruit, wine, etc.
Why are our products cheaper? Firstly, Ukrainian farmers are really unpretentious and ready to sell their grain at prices close to the cost of production.
Secondly, they are not subject to the requirements for animal welfare and crop cultivation that the European Union is subject to. "Ukrainian agriculture works with production practices that are no longer allowed in the EU," said Hungarian Agriculture Minister István Nagy.
What about Romania? So far, it is the key issue that concerns the entire agricultural sector. Officially, the country has not declared its intention to impose restrictions on Ukrainian products. On the other hand, farmers continue to protest in Bucharest, demanding to follow the example of their neighbours.
Is there any good news? Yes, there is.
Land logistics was a compromise from the very beginning. Its development threatens the existence of Odesa and Mykolaiv transhipment facilities, which is strategically disadvantageous, primarily for Ukraine itself.
There is no alternative to the sea, so European logistical difficulties are isolated, temporary, and not crucial for the markets. However, they are very indicative in terms of assessing the political agenda and expectations of Ukraine's membership in the EU.
If you have read this article to the end, we hope that means it was useful for you.
We work to ensure that our journalistic and analytical work is of high quality, and we strive to perform it as competently as possible. This also requires financial independence. Support us for only UAH 196 per month.
Become a Mind subscriber for just USD 5 per month and support the development of independent business journalism!
You can unsubscribe at any time in your LIQPAY account or by sending us an email: [email protected]
